Evergreen leasing of aquaculture sites

Abstract

Government policy on siting of aquaculture must balance the objective of providing a long planning horizon for the industry against a broader social interest in adapting lease terms to new environmental information. Evergreen leases are proposed to balance these objectives. Under an evergreen lease, the lease renewal occurs not at the end of the lease, but rather at midterm. For example, a 20-year lease might be renewed at year five or year 10. The mid-term renewal process avoids end-point biases and also creates incentives for the two parties to successfully bargain a renewal. Evergreen leases are an appropriate institution when two parties want a long-term relationship but recognize that terms of the relationship must evolve to reflect new information.